What Can an Annuity Bring to Your Retirement Plan?


Whether you’re retiring in 3 years or 30, having an annuity is a wise decision. With an annuity, you can ensure that your money lasts throughout your golden years. Adding an annuity to your retirement strategy can give you peace of mind that you’ll have access to the funds you need, for as long as you need them.

Here are some of the top perks that an annuity can bring to your retirement plan.

Guaranteed income

Contributing to an IRA, 401(k), or both during your working years is important. These investment accounts create a solid foundation for a financially secure retirement. But what if you didn’t save enough? What if your money runs out? These accounts can’t guarantee income for life, but an annuity can.

In simplest terms, an annuity is insurance for your retirement income. Annuity payments can be set for a period of time or for life. Having the right annuity ensures that you don’t run the risk of outliving your savings.

Different options to choose from

Other retirement accounts only offer one or two options to choose from. Annuities are the most flexible retirement investment, offering several types. The four main types of annuities include:

  • Fixed
  • Variable
  • Indexed
  • Income

Having the ability to choose makes it easier to find the one that best meets your needs. For example, if you’re looking for a fixed rate of return on your retirement investment, choose a fixed annuity. These are great if you’re looking for a low-risk option.

Want to invest in the market without the risk of losing your investment? An indexed annuity offers some market growth but no risk of losing your funds.

Grow your funds tax-deferred

Certain types of annuities, including fixed and variable deferred, enable you to grow your contributions tax deferred. This means that both your earnings and premiums will benefit from compound interest.

Once you start to receive annuity payments, any non-qualified funds that you contributed are not taxed. Because taxes are taken upfront, you’ll receive full payments.

Contributions from an IRA or 401(k) account are taxed upon withdrawal, which lowers your monthly income.

Final thoughts

Retirement may seem so far away, but the sooner you plan, the better off you’ll be. Whether your retirement plan is to spend time at your beach house or simply more time with family, having an annuity can help turn your plans into reality.

With the right annuity, you can enjoy guaranteed income and pre-taxed payments, which means more money in your pocket.


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